Wage Bargaining Tensions in Italian and Greek Banking: The role of employer associability and labour-state coalitions

The paper was written while I was visiting researcher at the European University Institute, Florence. I wish to thank Christa Van Wijnbergen (LSE), Kevin Featherstone (LSE), Richard Hyman (LSE), Marco Simoni (LSE), Pepper Culpepper (EUI), an anonymous referee and the Editor for comments and conversations that improved this paper. Financial support from Bodossaki Foundation and LSE is gratefully acknowledged. Any remaining errors are my own.How do we explain divergent trajectories of change in wage bargaining institutions? Existing studies maintained that European economic integration and liberalisation, decline in trade union power, changing work organization and new pay systems would push national wage-setting institutions towards decentralisation. This expectation, however, was not borne out. Instead, change in wage bargaining has been more nuanced and differentiated than anticipated. To overcome the limitations of earlier theoretical conjectures, this paper explores the mediating conditions under which centrifugal tendencies in wage bargaining are likely to be reversed. I argue that ‘employer associability’ and ‘labour-state coalitions’ mediate pressures for convergence to the Anglo-Saxon model of decentralised bargaining. A strong employers association is expected to better appreciate the long run benefits of industry-wide bargaining, but also accommodate its firm-members needs for increased flexibility, striking effective compromises. In the absence of a strong employers association, the state may ‘fill the gap’ of employer associability and the institution is likely to survive due to a labour-state coalition. Unions will likely stem an employers’ offensive, if they are able to speak with a single voice and use their political influence effectively. The relevance of the argument is suggested by two critical case studies that trace developments in wage bargaining since the mid 1990s in Italian and Greek banking